Warren Buffett bailed out luxury geegaw flogger, Tiffany’s this week by buying $US250 million of the struggling jeweller’s debt, a sign of just how fraught the top end of town is. US retailing is struggling and only the giant Wal-Mart is purring.
But the bottom end of the US economy needs no help from America’s wealthiest man.
The recession is great news (Wazza should have got on board when the shares fell to a low in December). Cheap is chic. Just look at Wal-Mart, Costco, MacDonald’s, KFC and anything with carbs and value.
In fact Wal-Mart’s growth in sales of $US16.2 billion in 2008 accounted for 50% of the increase in total US retail sales excluding car, fast food and petrol sales.
And this new “value” approach includes the butt of so many jokes: Spam. (Remember the Monty Python song, Spam?)
Spam is one of the main products of Hormel Foods which reported its first quarter earnings overnight.
Hormel Foods Corp reported higher-than-expected profits, as recession-hit consumers turned to its Spam lunch meat and Dinty Moore stews; it also reaffirmed its full-year earnings outlook (a rare thing for corporate America in this recession).
Hormel said net earnings fell about 8% to $US81.4 million, from $US88.2 million.
“Changes in consumer behaviour resulting from the recession have had a mixed effect on our sales,” said Chief Executive Jeffrey Ettinger, noting an upswing in some of its traditional brands and a weakening of some newer convenience items.”
“Strong sales of canned meat items such as our Spam family of products, Dinty Moore stews and Hormel chilli more than offset softer sales of our Compleats microwavable meals,” the company said in its earnings release.
“The Meat Products business unit performed well during the quarter, led by strong results for value-added products such as hams and bacon and sandwich meats.
“Foodservice sales declined during the quarter, reflecting the decision by consumers to eat more meals at home and the reduction in both business and personal travel.”
Hormel shares are up 22% from the 12 month low of $US24.84 reached in early December. The US stockmarket is basically unchanged in that time after being up 20% in mid January.